DALLAS, TEXAS, July 29, 1998 - Allegiance Telecom, Inc. announced today that it received competitive local exchange service authority in Massachusetts. The company will deploy a network in Boston, with services throughout the surrounding suburbs.

Allegiance plans to provide businesses with a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. The Company is targeting 24 major metropolitan areas in the U.S. with its "one-stop shopping" approach. In addition to the Atlanta, Dallas, and New York markets where the Company has already begun to provide service, other markets scheduled for initial service in 1998 include Chicago, Ft. Worth, Los Angeles, Northern New Jersey and San Francisco.

"Allegiance is looking forward to having the opportunity to bring the benefits of competition to customers in Boston," said Royce Holland, chairman and CEO of Allegiance Telecom. "Users of voice, data and Internet services will soon have an expanded choice for their communications needs, similar to the choices customers can now make when selecting a long distance phone company."

"Massachusetts consumers clearly benefit from the Commission's highly-efficient approval process for new entrants such as Allegiance," said Robert McCausland, vice president of regulatory and interconnection at Allegiance. "Allegiance's people are proud to be able to proceed with their delivery of quality products and services in the Commonwealth."

Allegiance Telecom is a competitive local exchange carrier headquartered in Dallas, Texas. The Company's web address is: www.allegiancetele.com. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX.

NOTE TO EDITOR: Royce Holland, chairman and CEO of Allegiance Telecom, was one of the original founders of MFS Communications Company, the first major competitor to the Bell System. As president of MFS, Holland was an industry leader in developing the competitive provisions of the Telecommunications Act of 1996, which opened the local exchange market to competition throughout the U.S. Under Holland's leadership, MFS grew from a privately held start-up operation to one of the Nasdaq 100 Index companies with annual revenue of approximately $1 billion and a market value of approximately $13 billion.